Chapter 1 and 25 Flashcards
Quality management
The act of overseeing all activities and tasks needed to maintain a desired level of excellence
focuses of long-term goals through the implementation of short-term initiatives
External triggers to change
Demographic characteristics
Technological advancements
Market changes
Social and political changes
Globalization
Customers
Competitors
Scarcity of resources
Faster production possibilities
Internal triggers to change
Size changes
HR problems and prospects
Demographic and social influences
New management concepts
Inefficient processes or unproductive activities
Growth in size and scope of activities
Reformulation of the corporate strategy
Organizational development
Sporadic quality problems
Sudden, adverse change in the status quo
Dramatic
Required remedy by restoring the status quo
Once-off problem
Attacked by the control process
Chronic quality problems
Long-standing adverse situation
Requires remedy by changing the status quo
Difficult to solve, accepted as inevitable
Continuous improvement addresses chronic problems, involving the whole organisation
Why should you assess quality performance
Understand the baseline of your culture, system, processes, people, and cost
Understand what needs to be changed or improved
Types of organisational assessments to assess (quality) performance
- Quality risk
- Cost of poor quality
- Performance and standing in the marketplace
- Assessing using national performance standards and awards
- Assessing to the international system standards
- Competitive benchmarking best practices
Quality risk assessment should include 3 things
APPROACH: What are the organisational approach, intent, and design used within the organisation?
DEPLOYMENT: How broadly has the approach been deployed/executed in the organisation?
RESULTS: What are the measurable outcomes that demonstrate the approach and deployment are valid?
Why should the assessment be organisation-wide?
Systems perspective
Internal and external customers
Avoid displacing problems
The whole is bigger than the sum of its parts
You’ll find the problem wherever you go looking for it
Organisation wide assessment elements
Cost of poor quality
Standing in the marketplace
Employee culture
Overall health of the operating and quality systems
Cost of poor quality
The annual monetary loss of products and processes that are not achieving their quality objectives
The cost of poorly performing processes
Purpose of calculating the Cost of Poor Quality
Quantifying the size of the quality problem in monetary value
Identify opportunities for cost reduction
Opportunities for reducing customer dissatisfaction and associated threats to product saleability can be identified
Provides a means of evaluating the progress of quality improvement initiatives
Supports the development of a strategic plan
Cost of poor quality comprises of …
Cost of nonconformities
Cost of inefficient processes
Cost of lost opportunities for sales revenue
Prevention costs
the cost incurred in the process to reduce potential defects and errors
- quality improvement costs
- quality training
- planning
Appraisal costs
the cost of determining the current quality of the production process or service (inspection costs)
Internal failure costs
the cost incurred when defects and errors are found before delivery to the customer
External failure costs
the cost of trying to correct defects and errors after the product or service is delivered to the customer
Hidden costs (of poor quality)
Lost sales
Process downtime
Extra inventory
Lost discounts
Damaged goods
Premium freight costs
Customer allowances
Overtime to correct orders
Loss of goodwill
Paperwork errors
Obsolete inventory
Incorrect orders shipped
Extra process capacity
Optimum cost of quality
To determine whether quality improvement has reached the economic limit:
Compare the benefits possible from specific projects with the costs involved in achieving these benefits
When no justifiable project can be found, the optimum is reached
Importance of good quality
Leads to:
Higher customer satisfaction
Increased sales volume
Company’s reputation
Product liability
Market gains
Higher price
Reduced costs
Higher productivity
Lower rework/scrap
Consequences of poor quality
Loss of business
- customer won’t busy the product or any other product again
Loss of reputation
- Customers complain about their bad experience to friends and relatives
Higher costs
- Poor quality costs money and reduces profitability (cost of poor quality)
